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MENAFN- Daily Forex)
- Recent signals from Trump have strongly supported gold prices, with gains reaching a resistance level of $2764 per ounce, the highest level for spot gold prices in nearly three months.
- Obviously, this was before gold bullion prices stabilized around $2756 per ounce at the time of writing the analysis.
- Gold investors will remain in a state of cautious anticipation for the new US administration's measures, which may or may not support investors' appetite for buying safe havens, with gold being one of its most important elements.
Will US tariffs affect gold?
After his official inauguration, Trump expanded his threats of tariffs in China and the European Union, in addition to his indications targeting Canada and Mexico in the coming weeks. Investors are therefore focusing on the implications of the Trump administration's policies regarding tariffs and tax cuts, which economists say could reignite inflation - limiting the Federal Reserve's ability to continue easing monetary policy. Typically, high borrowing costs create headwinds for bullion as they increase the opportunity cost of holding non-yielding assets.
According to gold trading companies' platforms, gold bullion prices recorded record numbers during the year 2024 with net gains exceeding 27 percent of the value of gold. Gold price gains came amid the Federal Reserve's shift to lowering US interest rates, geopolitical tensions, and central banks buying more gold bullion. In the future, the gold market may receive more strong momentum from demand for safe haven assets amid concerns about Trump's immigration policy, as well as the increasingly tense US relations with other countries.
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According to recent trades, the US dollar declined , along with the stabilization of the yield on 10-year US Treasury bonds at around 4.57%, which was positive for gold prices. Prices had previously faced pressure in recent sessions as investors considered US President Donald Trump's plans for tariffs. Trump had stated on Tuesday that he is considering imposing a 10% tariff on goods imported from China, which will come into effect on February 1, 2025, just one day after threatening Mexico and Canada with tariffs of around 25%.
However, none of these threats have been implemented in policy yet, fuelling hopes that the administration will adopt a more cautious approach to tariffs, which could ease inflationary concerns. Earlier this month, the yield on 10-year US Treasury bonds rose to its highest level in more than a year, driven by concerns that Trump's "America First" policies and pro-growth approach could fuel inflation, which could hinder the Federal Reserve's ability to further cut US interest rates.
Despite those concerns, financial markets still expect the Fed to cut rates by July, with additional rate cuts possible by the end of the year Price Technical Analysis and Expectations Today:
According to today's gold analysts' expectations and the performance on the daily chart, the general trend of gold prices is still bullish and the opportunity for prices to move towards the psychological resistance of $2800 per ounce is technically strong after bulls moved prices towards the resistance levels of $2766 and $2785 per ounce, respectively. Be careful, dear, as the technical indicators are closer to strong overbought levels, as in the direction of the Relative Strength Index and the MACD indicator . In general, we still prefer the strategy of buying gold from every downward level, but without risk. Meanwhile, monitoring the factors affecting the gold market, the price of the US dollar, the future of Trump's policies, and the extent of investors' appetite for risk or not in light of global geopolitical tensions.
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